On May 11, GMF hosted Robert Litan, Vice President of Research and Policy at the Kaufmann Foundation, and Paul O'Donovan of the Welsh Assembly Government, for a discussion entitled, "Catching Up? Myths and Challenges surrounding the American-European Entrepreneurship Gap." GMF Fellow Stefan Theil opened the event with remarks on the importance of fostering entrepreneurship in the current shifting economic and political climate.

To listen to a podcast interview with Robert Litan and Paul O'Donovan, click here. Additional audio is available for download on the GMF Multimedia page.

Litan began by drawing an important distinction between innovative and replicative entrepreneurs. The latter, while an important market influence, matters less than the former in true entrepreneurship. Innovative entrepreneurs create many positive externalities, and tend to capture only 2-3% of their own benefits. Therefore, innovative entrepreneurs contribute a great deal to society and the market, such as Skype and YouTube. Litan emphasized the need to address the question of how governments should encourage this type of entrepreneur. While it is a somewhat natural product of cultural cycles, it is possible for governments to create entrepreneurship-friendly environments by making it easier to open a business, rewarding entrepreneurs with low tax rates and few growth impediments, and discouraging, "negative entrepreneurs," or those who partake in illegal activities and fail to constructively contribute to society.

According to Litan, these policy recommendations bring up the question of how much regulation is too much, and the stickier problem in the U.S. of finding the correct people to run businesses.

Paul O'Donovan followed with a presentation from the EU perspective, in which he described entrepreneurship in the EU as being in a, "very different situation." For example, Luxembourg, the richest EU member with one of the highest standards of living within the Union, is 23 times wealthier than the poorest member, Romania. With 23 different languages and no true common market, it is a dissimilar environment for entrepreneurship compared to the United States.

He described several entrepreneurial hotspots in the EU, including Belgium, Ireland, Estonia, and the United Kingdom, pointing out the wide spectrum of differences between them. For instance, entrepreneurship in Estonia has benefited from having been a center for Soviet navy technology training and animal genetics research. Ireland's successful policy agreement between government, labor, and business combined with investments in education allowed it to leapfrog certain technologic advances and arrive earlier than most other countries at a state of high technological capability and usage. By contrast, member states like Belgium and the United Kingdom have long-established education and economic systems, developed tax systems, and policies that are friendly to entrepreneurship.

The views of Paul O'Donovan were strictly his own and not representative of the Welsh Government's.